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Ninth Circuit:
False-Advertising Suit Fails Where Companies Allegedly Duped Disclaim Reliance on Ads
Dissenter Says Summary Judgment Improperly Granted Because Reasonable Juror Might Regard Testimony Disavowing Being Fooled As Face-Saving
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has affirmed a summary judgment in favor of the defendant, a healthcare company, based on testimony by two lab representatives that their companies switched from the plaintiff’s product to the defendant’s rival version based on internal tests, not on allegedly false advertising—with a dissenter arguing that a reasonable juror could discount their testimony as being founded on self interest.
Plaintiff Quidel Corporation, based in San Diego, manufactures Thyretain which, it contends in its complaint, is “the only commercially available” blood test that detects thyroid-stimulating immunoglobins (“TSI”), and only TSI. High levels of TSI can indicate the presence of Graves’ disease or other thyroid-gland disorders.
Quidel sued Siemens Medical Solutions USA. Inc., headquartered in Pennsylvania, under the federal Lanham Act for allegedly false statements in advertising that its own competing product, Immulite, detects TSI, and that property alone. (The plaintiff also stated causes of action under California law but they were dependent upon the viability of the Lanham claim.)
Distorted Results
In fact, Quidel averred, Immulite also picks up readings of thyroid-blocking properties, which skews the results. This “will lead to false positives and the misdiagnosis and mistreatment of patients, including, for example, potential unnecessary surgery to remove all or part of a patient’s thyroid (thyroidectomy or subtotal thyroidectomy),” the complaint sets forth. The harm to itself, Quidel contended, is that two particular laboratories stopped purchasing Thyretain and switched to the less expensive Immulite.
In a memorandum opinion, Circuit Judges Jacqueline Nguyen and Ryan D. Nelson affirmed a decision by District Court Judge Cynthia A. Bashant of the Southern District of California in favor of Siemens.
Majority’s Opinion
They said:
“Even if Siemens’ advertising of its [blood test] Immulite…was false, it was not material to the laboratories’—LabCorp and Sonic CPL—decision to purchase Immulite and not Quidel’s assay, Thyretain….There is no direct evidence in the record for which a reasonable juror could find that Siemens’ allegedly false statements were material to the decision-making processes of the two laboratory customers.”
The circuit judges pointed to declarations by two medical doctors, one employed by LabCorp and the other by Sonic CPL, that the advertisements did not affect the decision to switch to Immulite.
Nguyen and Nelson said that the “the nature of the audience” of the advertisements—”highly-skilled and credentialed professionals”—was “such that representations about the type and quality of an assay are not reasonably likely to influence their purchasing decisions” even if they sparked the labs’ initial interest.
Bennett’s Dissent
In a dissent, Circuit Judge Mark J. Bennett noted that the declarants each said that a blood test which did include a detection of thyroid-blocking properties would not be useful, also observing that Siemen’s, in its advertising, accentuated a representation that Immulite ferrets out only the TSI level.
He wrote that a “rational juror could easily infer from this evidence that whether Immulite was a TSI assay was an important factor to the laboratories—one likely to influence their decisions—and that Siemens made the representations it did because it knew the distinction between TSI” and an inhibitor “was important to the purchasers.”
Bennett asserted:
“Siemens’s alleged false statements were the catalyst that led to the purchasing decision and therefore likely influenced the purchasing decision. Thus, I would find a triable issue on materiality.”
The judge noted that his colleagues reached “a contrary conclusion by fully crediting” testimony by the laboratories’ doctors. Indicating that he would not do so, he said:
“[A] reasonable juror could reject this testimony given that the laboratories’ witnesses had strong incentives to give testimony validating their prior decisions. The laboratories’ sophisticated experts would be reluctant to admit that they had been deceived and had incorrectly recommended switching to Immulite.”
Presumption of Injury
Bashant found that “Quidel has not established” that it and it and Siemens “are in direct competition in a two-player market,” also known as a duopoly. Bennett noted that the majority did not address that issue, but commented that if there is a two-player market, it is significant because there would then arise a presumption of injury.
He said that “[t]he evidence supports” the proposition “that the parties operate in a two-player market” because the laboratories only weighed Thyretain against Immulite. On the other hand, the circuit judge noted, Quidel’s own survey shows that most doctors responding to inquiries would want both a TSI and a reading of thyroid-blocking properties before assessing a patient’s condition, casting doubt on a “two-player” theory, and giving rise to a triable issue.
The case is Quidel Corporation v. Siemens Medical Solutions USA, Inc., 20-55933.
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